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Preheat oven to 350F. Line two baking sheets with parchment paper.
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Sift together flour, baking powder, baking soda and salt together in a medium bowl. Set aside.
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In the bowl of a stand mixer fitted with a paddle attachment, cream together 1 ½ cups sugar, cream cheese, and butter until light and fluffy. Beat in canola oil, vanilla, and lemon zest until combined.
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Gradually add the flour mixture, beating only until it is just combined.
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Put the remaining ⅓ cup sugar on a plate or pie pan.
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Take about a tablespoon of dough and roll it into a ball. Roll in the sugar and place on prepared pan. Repeat with remaining dough.
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Using bottom of a drinking glass or a measuring cup, flatten each cookie and top with sprinkles.
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Bake, rotating the sheets halfway through, about 12 minutes or just until golden around the edges.
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Allow to cool on sheet for about 2 minutes before transferring to a wire rack to cool completely.